Decision Sciences
3 years ago

Construction firms in Japan collude on $40 billion projects, impacting fair competition.

Journal of Political Economy
Detecting Large-Scale Collusion in Procurement Auctions
Kei Kawai, Jun Nakabayashi

Paper Summary

Construction firms in Japan colluded in procurement auctions, as shown by analyzing data from 42,000 auctions worth $40 billion. Collusion was detected when all initial bids failed to meet a secret reserve price, leading to rebids. Over 1,000 firms engaged in non-competitive behavior, winning 15,000 projects, which is 37% of the total projects studied.

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